Oil prices fell to their lowest level in about three weeks on Thursday, as a firmer dollar and rate hike expectations outweighed lower US crude stocks.
Brent crude futures were down $1.65, or 2%, to trade at $81.47 a barrel at 1342 GMT. West Texas Intermediate crude (WTI) futures dropped $1.61, or 2%, to $77.55 a barrel.
Both benchmarks, after a 2% fall on Wednesday, are at their lowest since late March, just before a surprise OPEC+ production cut announcement, but not all those gains have been wiped out.
Equities markets, which often move in tandem with oil prices, were down after disappointing results from Tesla and other companies, while the US dollar index has risen around 0.2% this week, putting it on course for its strongest week since late February.
A strengthening greenback makes oil more expensive for holders of other currencies.
Although the number of Americans filing new claims for unemployment benefits increased moderately last week, employment is still strong and a Reuters poll of economists showed the US Federal Reserve is likely to deliver a final 25 basis point rate rise in May, ending an aggressive spate of policy tightening.
In Britain, persistent double-digit inflation has also bolstered expectations of a further Bank of England rate hike.
Meanwhile, US crude stockpiles fell by 4.6 million barrels as refinery runs and exports rose, while gasoline inventories jumped unexpectedly, according to the US Energy Information Administration.
On the supply side, oil loading from Russia’s western ports in April is likely to rise to the highest since 2019, trading and shipping sources said.
Pakistan has placed its first order for discounted Russian crude under a new deal which could cover 100,000 barrels per day, the country’s petroleum minister said. The purchase gives Russia a new outlet, adding to Moscow’s growing sales to India and China, as it redirects oil from western markets because of the Ukraine conflict.
Published in The Express Tribune, April 21st, 2023.
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